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Sunday, 11 October 15
TANKER SHIPPING: MORE OPTIMISM IN SIGHT FOR TANKERS IN THE WINTER SEASON - BIMCO
 Demand:
2015 has been the year of the tanker. The fundamental improvements with slow supply-side growth for some years coupled with low oil prices from mid-2014 created strength on both sides. Freight rates started to take off in October 2014 for all types and sizes. The combination of an early start to the fourth-quarter seasonal strength heading into winter and the fact that the oil prices continued to slide became a catalyst.
Throughout 2015, the global refinery throughput has been on a rise. The normal seasonal lower throughput in the first half of the year with widespread maintenance did not occur. Owing to rising and already elevated refinery margins from East to West, refineries simply wanted all the crude oil they could get. This development still provides strong demand and solid freight rates for the tanker industry. In India, we saw a record of 4.74 million barrels per day (mb/d) of crude throughput in June, marking a truly global trend, whereas Middle Eastern refineries also hit a record throughput because of increased runs in Saudi Arabia.
October is traditionally another month of lower throughput as refineries get ready for the winter season when crude runs normally peak. Moreover, the American “Labor Day” on 7 September marks the end of the US driving season which started on Memorial Day, 25 May. This means that the recent 10mb/d production of gasoline will come down.
Some of that weakness may already have caused freight rates to come down sharply, in combination with the global financial uncertainties originating from China. Very large crude Carriers (VLCCs), Suezmax and Aframax have seen freight rates cut in two since mid-June, while Handysize has been the one to drop the most among oil product tankers.
In a rush of excitement, it’s easily forgotten that such high refinery crude runs can only go on for so long, if end consumption supports it. End consumption has supported it some of the way but not all the way. Swollen stocks of crude oil and oil products are now seen everywhere. Preliminary OECD total industry stock change in second-quarter was 1.1mb/d. All stocks but gasoline increased, US crude oil stocks too. In comparison global oil demand dropped by 0.1mb/d over the same period of time and is expected to see an increase of 1.6mb/d to be consumed for the full year over 2014.
Supply:
Contrary to what happens too often, the strong freight markets for oil product tankers have not resulted in a knee-jerk run to the shipyard to order a massive amount of new ships. This stands in opposition to the crude oil tanker orders seen in 2015, as if the lid has come off finally after several years of resisting the temptation.
By end-August 2015, 56 product tankers with a total capacity of 4.8 million DWT, predominantly LR2 (20) and LR1 (21), have been ordered and will be delivered in 2016-17. They are aiming to get a share of the market for longer-haul trades out of Middle East refineries, predominantly into the Western markets. This ordering trend has been on for two years now.
Among the crude oil tanker segments, we have already seen more orders for both Aframax and VLCCs than we did in the whole of 2014. Aframax in particular has been popular with investors this year; after six years with one order a month on average, 2015 has seen 29 new contracts in the first eight months. For the VLCCs, the orders with delivery in particular 2017 (21) and in 2018 (14) have been favoured by investors. In 2015, 50 new VLCC contracts in total have been signed.
One of the launchers which has lifted the freight rates into orbit is two years of very slow fleet growth. Today the fleet holds 648 VLCCs, whereas 628 VLCCs were active by mid-2013. That’s a growth of just 3% in 26 months. Looking forward into the future inflow of crude oil tankers, we can see the delivery pace is picking up and the demolition potential is vanishing with just 14 VLCCs being more than 20 years old and another 16 getting inside the window of the fourth special survey in 2016.
On order for a scheduled delivery during the next 16 months are 71 VLCCs. This means a double-paced inflow as it has taken 34 months for the latest 71 VLCCs to be put into active service.
The change in supply-side conditions will slowly tighten the freight market, and as we look into 2016, the tide could turn fundamentally as a fleet growth of 4.4% is likely to outstrip demand growth. As the coming two years are now “full” in terms of remaining in control of supply-side growth, any additional crude oil tanker orders should be placed for 2018 delivery.
BIMCO forecasts the present and next year supply growth for oil product tankers to be at 5.4% and 5.7% respectively, meaning two “full” years too for that segment.
Outlook:
Looking forward, the winter markets are expected to soften, as the eventual lower refinery crude oil throughput when no more stocks can be filled and margins begin to crumble as demand slips. Until then BIMCO expects earnings for both crude oil and oil product tankers to remain strong. Our expectations are primarily supported by low fleet growth for crude oil tankers and long-haul trades for oil product tankers.
High volatility in freight rates can be expected in the coming half year half a year, when it may also be prudent to look at the time charter market, where one- and three-year time charter rates are both at their highest level since 2009. At USD 48,000 per day and USD 43,500 per day, time charters will make positive returns after all costs inclusive of capital cost and depreciations are deducted.
In the longer run, an eventual repeal of the US crude oil export ban will likely have some impact on the tanker trading lanes. The US congress is set to vote on the issues during this autumn. For the supporters the case is clear: US refineries are saturated with light sweet crude which is produced abundantly. For those in favour of keeping the crude oil export ban still in place there is “national interest”, which currently seems to hold the upper hand. Currently, the only crude oil exports today go to Canada (0.5mb/d).
Moreover, the eventual lifting of international sanctions on Iran is likely to see a steady increase in crude oil, both sweet and sour, into the market over the coming one to three years, depending on much-needed investments to boost production and time to regain market shares. BIMCO expects the re-entry of Iranian crude oil into the market will change trade patterns as other suppliers will be squeezed on their market share. The key will be West African produced sweet crude now going to Europe and East Asia. The latter is the vital one and a stronghold behind the current upturn. The overall impact on the tanker earnings from these changes holds the potential to become both negative and positive.
Source: BIMCO | Hellenic Shipping News
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Wednesday, 30 September 15
Q1'16 FOB INDONESIA COAL SWAP FALLS $1.25 A TON AS SLIDE CONTINUES
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 0.72 (-1.78%) per t ...
Wednesday, 30 September 15
NEW BUILDING MARKET INSIGHT
COALspot.com: This year has been, beyond any doubt, a rather strenuous one for the newbuilding market. Ordering activity with regards to Dry Bulker ...
Tuesday, 29 September 15
FOB RICHARDS BAY COAL SWAPS ARE SLIDING
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Monday, 28 September 15
API 5 FOB NEWCASTLE COAL SWAPS UP $2.15 IN ONE MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery increased $2.10 per ton (5.15%) month over month to US$ 42.93 per ton. The ...
Monday, 28 September 15
CAPESIZE FLEET INCREASES BY JUST 1 VESSEL DURING LAST 12 MONTHS, IN POSITIVE SIGN FOR DRY BULK SHIPPING MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
After a rather tumultuous period, the shipping industry and more particular the dry bulk market has started to adjust to the new realities of globa ...
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- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Planning Commission, India
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
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